MULTIPLE CHOICE – Flashcards

WHICH OF THE FOLLOWING IS PART OF AN ACCOUNT? a. Credit side b. Debit side c. Title d. All are part of an account

WHICH OF THESE RULES IS INCORRECT? a. Credits decrease the drawing account b. Debits increase the capital accounts c. Credits increase revenue accounts d. Debits decrease liability accounts

A CREDIT IS NOT THE NORMAL BALANCE FOR WHICH ACCOUNT LISTED BELOW? a. Capital account b. Revenue account c. Liability account d. Drawing account

IN RECORDING AN ACCOUNTING TRANSACTION IN A DOUBLE-ENTRY SYSTEM a. The number of debit accounts used must equal the number of credits accounts used b. There must be always be entries made on both sides of the accounting equation c. The total of the debits entries must equal the total of the credits entries d. There must be two accounts affected by any transaction

AN ACCOUNTANT HAS DEBITED AN ASSET ACCOUNT FOR $1000 AND CREDITED A LIABILITY ACCOUNT FOR $500. WHICH OF THE FOLLOWING WOULD BE AN INCORRECT WAY TO COMPLETE THE RECORDING OF THE TRANSACTION? a. Credit an asset account for $500 b. Credit another liability account for $500 c. Credit an owner's equity account for $500 d. Debit an owner's equity account for $500

WHICH OF THE FOLLOWING IS NOT TRUE OF THE TERMS DEBIT AND CREDIT? a. They can be abbreviated as Dr. and Cr. b. They can be interpreted to mean increase and decrease c. They can be used to describe the balance of an account d. They can be interpreted to mean left and right

THE STATEMENT THAT IS TRUE IS? a. Debits increase assets and increase liabilities b. Credits decrease assets and decrease liabilities c. Credits decrease assets and increase liabilities d. Debits decrease liabilities and decrease assets

AFTER A BUSINESS TRANSACTION HAS BEEN ANALYSED AND ENTERED IN THE BOOK OF ORIGINAL ENTRY, THE NEXT STEP IN THE RECORDING PROCESS IS TO TRANSFER THE INFORMATION TO THE a. Trial balance b. Journal c. Ledger accounts d. Financial statements

EVIDENCE THAT WOULD NOT HELP WITH DETERMINING THE EFFECTS OF A TRANSACTION ON THE ACCOUNTS WOULD BE A/AN a. Cash register sale tape b. Invoice c. advertising brochure d. cheque

THE RECORDING PROCESS OCCURS a. Once a year b. Once a month c. Repeatedly during the accounting period d. Infrequently in a manual accounting system

A COMPOUND JOURNAL ENTRY INVOLVES a. Two accounts b. Three accounts c. Three or more accounts d. Four or more accounts

ON JUNE 1, 2009 DIANE LENO BUYS A COPIER/FAX MACHINE FOR HER BUSINESS AND FINANCES THIS PURCHASE PARTLY WITH CASH AND PARTLY ON CREDIT. WHEN JOURNALISING THIS TRANSACTION, SHE SHOULD a. Use three journal entries b. Make a compound entry c. Make a simple entry d. List the credit entry first, which is proper form for this type of transaction

THE ENTIRE GROUP OF ACCOUNTS MAINTAINED BY A COMPANY IS CALLED THE a. Chart of accounts b. General ledger c. General journal d. Trial balance

THE POSTING OF JOURNAL ENTRIES TO THE LEDGER SHOULD BE DONE IN a. Account number order b. Alphabetical order c. Date order d. Dollar amount order

NOLAND COMPANY PURCHASES EQUIPMENT FOR 1200 AND SUPPLIES FOR 40 FROM SANDERS CO FOR 1600 CASH a. Debit to equipment 1200 and a debit to supplies expense 400 for Sanders b. Credit to cash for Sanders c. Credit to Accounts Payable for Noland d. Debit to equipment 1200 and a debit to supplies 400 for Noland

AN AWARENESS OF THE NORMAL BALANCES OF ACCOUNTS WOULD HELP TO LOCATE WHICH OF THE FOLLOWING AS AN ERROR IN RECORDING? a. A debit balance in the drawings account b. A credit balance in an expense account c. A credit balance in a liability account d. A credit balance in a revenue account

WHICH STATEMENT IS NOT TRUE? a. Expenses increase owner's equity b. Expenses have normal debit balances c. Expenses decrease owner's equity d. Expenses are a negative factor in the computation of profit

WHICH OF THESE SHOWS THE CORRECT SEQUENCE OF STEPS IN THE RECORDING PROCESS? a. Posting, journalising, analysing b. Journalising, analysing, posting c. Analysing, posting, journalising d. Analysing, journalising, posting

A JOURNAL PROVIDES a. The balances for each account b. Information about a transaction in several different places c. A list of all accounts used in the business d. A record of transactions in date order

ANOTHER NAME FOR A JOURNAL IS a. Listing b. Book of original entry c. Book of transactions d. Book of source documents

THE STANDARD FORM OF A JOURNAL ENTRY HAS THE a. Debit account entered first and indented b. Credit account entered first and indented c. Debit account entered first at the extreme left margin d. Credit account entered first at the extreme left margin

POSTING a. Should be performed in account number order b. Accumulates the effects of journalised transactions in the individual ledger accounts c. Involves transferring all debits and credits on a journal page to the trial balance d. Is accomplished by examining ledger accounts and seeing which ones need updating

A TRIAL BALANCE IS A LISTING OF a. General ledger accounts and their balances b. The chart of accounts c. Transactions in a journal d. All transactions

THE ACCOUNTING PERIOD ASSUMPTIONS STATES THAT a. The economic life of a business can be artificially divided into time periods for the purpose of reporting b. Activities of an entity are separate from the activities of the owner c. The accounting period should not exceed one year d. It is assumed that the business will operate indefinitely

ACCEPTANCE OF THE GOING CONCERN ASSUMPTION GIVES CREDIBILITY TO THE a. Historical cost principle b. Reliability principle c. Monetary unit assumption d. Full disclosure pinciple

THE GOING CONCERN PRINCIPLE IS INAPPLICABLE WHEN a. The business is just starting-up b. Liquidation is imminent c. Fair market values are higher than costs d. Net realisable values cannot be obtained

THE INFORMATION PROVIDED IN THE NOTES THAT ACCOMPANY FINANCIAL STATEMENTS IS REQUIRED BECAUSE OF THE a. Historical cost principle b. Full disclosure principle c. Matching principle d. Going concern principle

IN ORDER FOR ACCOUNTING INFORMATION TO BE RELEVANT, IT MUST a. Have very little cost b. Have predictive or feedback value c. Be reported to the public d. Be used by a lot of different firms

USING THE SAME ACCOUNTING PRINCIPLES AND METHODS FROM YEAR TO YEAR WITHIN A COMPANY IS UPHOLDING THE QUALITATIVE CHARACTERISTIC OF a. Reliability b. Timeliness c. Relevance d. Comparability

AN ITEM IS CONSIDERED MATERIAL IF a. It costs a lot of money b. It is of a tangible nature c. It is likely to influence the decision of a reasonably prudent investor or creditor d. The cost of reporting the item is greater than its benefits

A COMMON APPLICATION OF THE PRINCIPLE OF PRUDENCE (CONSERVATISM) IS THE USE OF THE a. Lower cost or net realisable value rule to value inventories b. Straight-line depreciation method for plant assets c. weighted average method of inventory valuation d. All of the above are common applications of the principle of prudence

PRUDENCE IN ACCOUNTING MEANS a. To understate assets b. To understate liabilities c. Old fashioned d. To choose the method that will be least likely to overstate assets and profit

THE HISTORIC COST PRINCIPLE STATES THAT ASSETS ARE RECORDED AT THEIR COST BECAUSE COST IS a. Confirmable b. Reliable c. Objectively measurable d. All of these

IF AN ENTITY REPORTS A LOSS, IT a. May still have a net increase in cash b. Will not be able to pay a cash dividend c. Will not be able to get a loan d. Will not be able to make capital expenditures

GENERALLY ACCEPTED" IN THE PHRASE GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, MEANS THAT THE PRINCIPLES a. Are proven theories of accounting b. Have substantial authoritative support c. Have been approved by the Taxation Department d. Have been approved for use by management